The story first started with three recent announcements below:
1) Ministry of Commerce of the People's Republic of China MOFCOM announced on 30 April 2024 that the year-on-year growth of export IP license fees (i.e. license fees paying to Chinese entities) has a 34.4% increase. (http://www.mofcom.gov.cn/article/xwfb/xwsjfzr/202404/20240403507142.shtml)
2) CNIPA together with the China National Financial Regulatory Administration on 22 May 2024 announced paperless operations for IP financing (i.e. mortgage based on IP like patents) in Chinese banks (https://www.cnipa.gov.cn/art/2024/5/22/art_75_192611.html). This is a nationwide announcement, and it is believed that this could make patent mortgage in any Chinese banks easier (less paper is always good).
3) Beijing Municipal Intellectual Property Office announced on 20 May 2024 their "Notice on Application for the Second Batch of Beijing Special Funds for Promoting High-Quality Development of IP financing" (https://zscqj.beijing.gov.cn/zscqj/zwgk/tzgg/436452416/index.html)
For 1), I could not find the original data, and it is a simple announcement form MOFCOM. As always, feel free to believe in data from a Chinese authority. In any event, it is unclear to me whether this increase includes numbers from internal licensing, i.e. from companies from Mainland China licensing to its overseas subsidiaries, which could be ballooned easily to make the top happy.
For 2), this makes sense as the CNIPA stops issuing paper patent certificates since 2022.
For 3), although this is a local announcement available to Beijing only (the company receiving the subsidies has to be registered at the Beijing Municipal Administration of Industry and Commerce), the measures are quite generous as below, subject to various conditions:
- 50% subsidy on interest, capped at RMB300,000 (about USD42,190) for one company each year.
- 50% subsidy on costs for obtaining the mortgage like IP evaluation costs and guarantees, capped at RMB20,000 for one company each year (aboutUSD2,810, which could be unrealistically little, though this is better than nothing).
- 50% risk compensation to financial institutions, capped at RMB1,000,000 (about USD140,625) for one institution each year.
For 3) again, although the measures are for Beijing only, as Beijing is the capital of China, it is not difficult to imagine that other provinces or cities would "copy and paste" these measures.
Patent financing has long been encouraged by the Chinese government and I have an article with @Constance Rhebergen of Bracewell LLP published in the April 2017 issue of the UK CIPA Journal, after which I am not aware of any announcement of big achievements from the Chinese government.
My major concern is that such "encouragement" would end up as scam, like the patent application subsidies, which may result in the announcement from the CINPA in 2022 and 2023 that such patent application subsidies would stop by 2025. Well, whether this would carry through is another thing, as afterwards there are still quite a number of cities or provinces announcing "mutated" versions of the subsidies, like the recent one reported by @Aaron Wininger (https://www.linkedin.com/posts/aaron-wininger-135113_china-continues-market-distorting-patent-activity-7199884111526707203-_21N?utm_source=share&utm_medium=member_desktop). However, it is clear that such subsidy system has been gamed and resulted in scams. Two examples are as below:
- A Shanghai patent agency is under criminal investigation for fraud, including packaging companies to obtain government subsidies (https://mp.weixin.qq.com/s/YX5GYXcs34zm7bd_j3ApWA).
- Another patent agency received administrative punishment for improper multiple recordal of assignments (without any authorization from or even notification to the applicants/patentees). It was believed that such assignments were done to obtain government recognition and/or subsidies. One interesting fact revealed by this is, each patent attorney in the patent agency has more than 2900 cases in his/her docket, though many of these were resulted from the illegitimate assignments.
Another one is a story I heard from a friend at INTA four days ago, which I have no way (frankly, interest) to verify. The story was that someone in China was jailed for 20 years by forming a company to help companies to obtain patent subsidies, but then not paying the involved patent agencies. If I got anything wrong with this story, please let me know.
The CNIPA is aware of the above, and continued to crack down on such frauds since 2021 under the so-called "Blue Sky Action" (https://www.cnipa.gov.cn/art/2023/7/6/art_53_186163.html). However, there is an old saying in China – "No one will do a business that will make you lose money, but someone will do a business that will cost you your life". I am concerned that the government-driven desire to monetize patents would end up in the same way of scamming.
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